Real market reforms for health care

Whatever the problems with the roll out of Healthcare.gov, the fact is that the government take-over of health care has been happening for more than a century. If we want a truly free market for health care, we have to think in broader and bolder terms than simply rolling back the ACA. With that in mind, here is a short list of patient-focused ways to get the government out of health care.

Abolish Medicare. By guaranteeing that older people get health care, Medicare distorts the entire system in favor of geriatric diseases. In my experience as an IBD patient, the median age for most gastroenterology patients is just under a century. This means doctors are better trained and equipped to deal with oldstersʼ problems, and less invested in their young patientsʼ problems. Abolishing Medicare would level the playing field for all patients — not just those favored by the government.

End FDA regulation. Currently there are two excellent medicines for IBD, which lack FDA approval — meaning their sale is illegal. This is an artificial constraint on the quality of my health care; in essence a prohibition against those medicines. Eliminating mandatory FDA approval would allow the free market to determine which medicines work and which donʼt — not the government.

End “prescriptions” for medicines. The FDA also decides that some medicines can be sold only with prescription. This artificially limits the supply and availability of those medicines. In my case, I know exactly what medicine I need to take: why should I pay a government-licensed doctor to write down what I already know, then pay a government-licensed pharmacist to read it back to me? It should be the responsibility of individual consumers to decide which medicines they take — not the government.

Defund government research for medical conditions. By choosing which diseases to focus on, the government tilts the field in favor of pet causes and conditions. Consider the imbalance between AIDS research funding and that for sickle-cell anemia, which clearly favors one special-interest group over another. The government could still fund basic research on biology and physiology, but should not play God. Let the market decide which diseases need more research — not the government.

Disallow patents for medical innovations. Patents are government-enforced monopolies over an invention; when it comes to medicines and medical supplies, this means the government chooses who can provide needed care. Right now several important IBD drugs are protected by patents, even though they all do basically the same thing. Competition means lower prices, but patents keep prices high for these medicines — much like mandatory FDA approval. We should eliminate patents to allow the market to decide who profits from innovation — not the government.

Ignore medical school accreditation. States typically license physicians only from accredited schools; moreover, certain federal loans and grants are only available for students in accredited medical schools. Yet accredited schools are producing doctors at the same rate they were 30 years ago – despite a nearly 40% increase in population. This artificial restriction on the supply of physicians is pushing our health care system into crisis; it is especially getting harder for patients like me to find primary care physicians. The free market — not the government — should decide which schools can train physicians.

End mandatory physician licensure. This one is Milton Friedmanʼs idea: anything that constrains the supply of providers increases the cost of health care, so government-mandated physician licensure is an unnecessary interference in the market. The AMA and other professional societies could offer certification on a voluntary basis, though I pay little attention to diplomas or board certification anymore: I look at whether the physician is in-network, and their reviews on Angieʼs List. Where is the value-added from a government license? The market would decide which certification processes work and which do not — not the government.

Free-market advocates understand that each government intervention in health care represents a distortion — often with the effect of raising prices and restricting care for the most needy patients. To fix our system, such interventions have to be weighed in the context of a proper free market system, and must not be tolerated merely because they are already law. Thatʼs the problem with the government take-over of health care: itʼs a slippery slope. First you require physician licenses, then start an FDA, then Medicare — and soon Healthcare.gov seems like a good idea.

Real market reform is not simply a matter of repealing the latest government outrage, but instead tearing the whole rotten system down and building a brand-new, free-market system from the ground up. Every government program or rule for health care represents a market distortion that must be justified — in market terms — or be abolished. That is the only realistic path towards a market-driven health care system.

“Duncan Cross” blogs from the perspective of a chronic patient at his self-titled site, Duncan Cross.

Real market reforms for health care 54 comments

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http://onhealthtech.blogspot.com Margalit Gur-Arie

They have this in Somalia, I believe. Very efficient…

Duncan Cross

Alas, the Somali government plans to introduce universal health care.

Thomas D Guastavino

If you truly want a free market in health care then you also have to eliminate the requirement that providers give away there services at below market rates or for that matter not get paid at all. Allow emergency rooms, physicians, hospitals etc to turn away any patient who cannot pay.

Duncan Cross

Well, in a totally free market, competition ought be so intense that providers will beg people to use their services — advertising them in the Sunday paper with the grocery coupons.

Thomas D Guastavino

Well, maybe in the beginning but, as it always does, the free market will efficiently correct that imbalance

Duncan Cross

Intense competition is not a signal of imbalance. In a free market, competition for healthcare customers should be every bit as stiff as it is for grocery shoppers and clothing consumers.

Thomas D Guastavino

That only works if the “customers” we are “competing for” are good, paying customers. Why would we compete for the non or underpaying customers.?

Duncan Cross

The point is that competition will drive prices so low that everyone can afford some sort of care — or so I have been told.

Thomas D Guastavino

As long as the “some sort of care” consists only of generic aspirin and store brand bandaids we should be fine.

Duncan Cross

You’re confusing cause and effect: generic aspirin and band-aids are cheap because of competition. In a free market, you’d be competing against unlicensed providers in Walmarts and Rite Aids, as well as homeopaths and faith healers and anybody else who wants to call themselves an MD. You will have to lower your own prices to compete, or else find a way to convince people you are worth the extra cost.

Thomas D Guastavino

As long as I can maintain the right to choose which patients I treat, for whatever reason, I have no fear of the “competition”

Duncan Cross

That’s because they’re not insulated from competition by a government-protected license. Surrender your license, and society no longer has any claim on your expertise.

Thomas D Guastavino

Glad to do it as long as I can still practice. Can we do the same to the lawyers?

Duncan Cross

You’re willing to give up your license, but are you actively advocating an end to licensure altogether? Until then, any talk of ‘free markets’ is half-hearted, at best.

I think lawyers have rather a better grasp on the economics: the Friedman link explains why lawyers envy doctors’ situation in this respect.

Thomas D Guastavino

On the contrary. It was you who said that society had a “claim” on my expertise because it “granted” me a license. Society did not “grant” me, or for that manner, any professional, my license. It was earned after years of hard work and sacrifice under the rules that “society” set up and it is insulting for you to belittle that fact. The only difference is that medicine is the only profession that is expected to give up its services for nothing or next to nothing. I know of no physician who is not willing to provide some pro-bono service but it has now reached critical mass. The coming collapse of access, the real crisis in health care, is just beginning.

Duncan Cross

I did not belittle your hard work, but the licensure rules you agreed to protect you from competition; I can’t recommend the Friedman link enough, apparently. In exchange for that protection, it seems fair say we have a claim on your expertise.

Thomas D Guastavino

What exactly are the “other rules” that you are referring to?

Duncan Cross

For example, the rules that say you have an obligation to take care of sick people, that prevent you from charging whatever you want for your services.

Thomas D Guastavino

Would you please define “obligation” for me?

Duncan Cross

At a bare minimum, it means not turning away people in need only because you think you deserve more of their money.

Thomas D Guastavino

And who decides the parameters you are describing?

Duncan Cross

Ideally, in a democracy, we all make those decisions together. You’d think physicians and patients would be natural allies in that process, but it’s a huge red flag when physicians talk about how great the free market is.

Thomas D Guastavino

So…We should put it a vote as to how as to how hard physicians work and how much they should get paid????? What happens if they refuse??? Funny, I thought this was still the United States where individuals had the right to make these decisions for themselves.

Duncan Cross

What you’re not getting is that what you are paid (and how hard you work) are *already* the result of government policy, which creates a huge market distortion.

Thomas D Guastavino

So your solution would be……….?

Duncan Cross

Let’s stop pretending the free market is going to solve anyone’s problems, and start building a system that gives everyone the care they need.

Thomas D Guastavino

Just as I thought. You really don’t have a clue as to how to solve the problem.

Duncan Cross

Here I am, trying to solicit positive input, looking for a meaningful conversation, and what do I get? Insults, not ideas. I like free markets fine: just not for things that are not optional to my being alive (e.g. healthcare). If it were left to me, I would prefer a single-payer system, or at least the public option. I think there are plenty of good models for universal healthcare provision out there, and am happy to talk about which one works best here. But for that conversation to be meaningful, it has to start from the principle that sick people deserve care. If you can’t accept that basic idea, we’re not going to get anywhere talking policy.

Thomas D Guastavino

I will try one last time to have a meaningful conversation. I have accepted your premise that sick people deserve care. My challenge, once again, how would you set up a health care system based on that premise?

Duncan Cross

Single-payer. Roll all gov’t programs (VA, Medicaid, FEHBP, Tricare) into Medicare, make Medicare the public option we were promised, then phase out the tax credit for employer-paid insurance. If folks want to stick with private insurers, they can, but anyone who can’t afford care gets subsidized Medicare. That said, I am happy to consider any other model that begins with my premise. What would your system look like?

Thomas D Guastavino

Here I am trying to solicit positive input, looking for a meaningful input, and what do I get? Nothing new, just the same old ideas that have been tried and are failing. Do you have any ideas that don’t involve turning providers into indentured servants ? There are many good ideas that improve quality, improve access and lower cost that providers find acceptable. Im sure you have heard of some like lowering barriers to competition amongst health insurers across state lines and, of course, tort reform. Want a fresh idea? Close to $100 billion of health care costs are generated by the use of alcohol and tobacco. What about a law that states that 100% of the tax revenue generated by the use of those products goes to defray the health care costs or to expand anti drunk driving programs. This would free up a lot of health care dollars that could be spent elsewhere.
There are a lot of good ideas out there but thats probably for another post. I wish you good health and good luck in your quest,.

Duncan Cross

We’ve never tried single payer in this country. I don’t see that it has failed. But I am glad we at least agree that sick people deserve care. I think any system built on that premise will be successful.

Thomas D Guastavino

We tried single payer. Its called Medicare, essentially single payer for the elderly. For 35 years it worked well because provider costs were covered and the taxpayers were willing to pay the support taxes based on the belief that someday they would be eligible.It is falling apart because of worsening regulations, reimbursement cuts, and unbelievably stupid ideas like means testing it. Medicaid is going from bad to worse.

Duncan Cross

Nope — not what single-payer means.

Thomas D Guastavino

Excuse me???

Duncan Cross

Medicare (the US version) is just one part of a system of many payers, along with Medicaid, TriCare, the VA, the NIH, and the FEBHP: that’s six different payers right there. None of them are single payer, nor are they in sum a single-payer system. We still haven’t tried single payer.

Thomas D Guastavino

So………..you believe that the answer to solving our health care problems is to take a bunch of government controlled programs that are falling apart and role them into one government controlled program???

Duncan Cross

I don’t accept the premise that Medicare, the VA, the NIH, Tricare, and the FEBHP are all ‘failing’. I’d also point out that while you have a good idea for funding a fraction of our health care system (taxes!), you haven’t articulated a system-wide plan for health care. I welcome your critique of my ideas, but I’d be more responsive to a coherent alternative proposal.

Thomas D Guastavino

The defense rests

Duncan Cross

Defense of what? You haven’t articulated a position to defend.

Original_Cait

(1) You do not actually understand the free market
(2) You are being disingenuous and smarmy again.

Martha55

I think we should repeal EMTALA..

As for free market, I rely on customer ratings when making a purchase and a rating of 3.4 at healthgrades would not be high enough product rating to consider a purchase.

With unlimited access to prescription drugs, I could avoid many visits to the doctor and rely more on my naturpathic physician.

Thomas D Guastavino

The beauty of free markets is freedom of choice for both buyers and sellers. Take that away and you have dictatorship. Of course that freedom does not guarantee that right choices are made but thats the risk each one of us take. I still believe that risk is worth it as the alternative is much worse.

Steven Reznick

Since KevinMD.com has partnered with or been bought out by MedPage we get exposed to writing like this which is incredibly irrelevant. Doctors train to recognize, treat and where possible prevent disease. Inflammatory bowel disease is an extremely complex and fickle condition and my heart and sympathies go out to the author. The FDA needs better funding and to be allowed to actually restore its labs and do the safety research independently as it once did rather than outsource this to third parties. If medicine is skewed towards seniors it is because medicine is keeping people alive longer who live to have chronic conditions.
The Affordable Care Act is extremely bureaucratic and developed by lobbyists for the insurance and pharmaceutical industries and ” physician friends of the administration” with a personal gain to be made. It remains to be seen if it will be an albatross or a first step towards improved access and care for all ( I doubt it wil). Congress has the opportunity to actually read it and improve it but they probably do not possess the courage or conviction to do either.
If articles like this are the best MedPage and KevinMD can do then maybe its time for most of us to find an alternative site to read and chat on.

Thomas D Guastavino

I believe that Duncan Cross was using sarcasm to belittle anyone who does not agree with him that access to health care is a fundamental right. The challenge to anyone who believes this is not the belief but exactly how a health care system that is built around that belief would function. Once you pressure them on this point their arguments quickly fall apart.

Duncan Cross

Steven — I don’t know that MedPage has anything to do with it, but we do see a few posts and lots of comments here about ‘free markets’, tending towards obvious things like ‘repeal the ACA’. I thought it might be helpful to suggest a full range of market-based reforms, to give those arguments more substance. You’re right that the FDA and Medicare and government research play important roles in our healthcare system, but they do come at the cost of market efficiency. I totally understand that some people will object to the above reforms, and even the claim that the market is the best organizing principle for health care. That is a conversation I am willing to have.

Duncan Cross

IBD, not IBS. Johnson & Johnson pulled $6 billion from Remicade in 2012, so there’s some money. Fortunately, most of my meds were originally developed for other conditions. I’ll be fine.

Duncan Cross

My frustration is with self-identified doctors who use the ‘market’ as a panacea for everything wrong with our health care system. My goal in this post is to encourage discussion of what an actual free market would look like. While I had hoped for a more substantive response, the fact that I have not gotten it means I am comfortable dismissing any ‘free market’ criticisms of my claim to a right to health care.

Original_Cait

You seem comfortable dismissing ANY talk around here that doesn’t agree with you that we should provide you with all the free healthcare you want because you claim that it’s some sort of basic constitutional right on par with the right to free speech. If someone tries to dissuade you of the notion that demanding goods and services from other free citizens should be your “right”, then you turn on the sneer and snark and dismiss them like an adolescent would do a parent who tries to explain why they can not and will not go into hock to send them to Maui for Spring Break.

The high point was when you likened another blog writer here to Bull Connor and implied that his disagreement with your argument was akin to a racist in Jim Crow Alabama setting the dogs on blacks. You are not making serious arguments, you are not making serious rebuttals, you are not putting forth serious proposals, you are not a serious person. I agree with Dr. Reznick about the direction this blog is taking, which is why I rarely bother to engage here any more.

Kimberly Burgess

Interesting thoughts and opinion from someone outside the medical profession…a consumer.
Some thoughts/questions:
There is a difference between “licensure” and “board certification” or accreditation by a body such as the AMA. I agree that less government intrusion in everything would make me happier. Of course, I do think that most of us like the “regulations and laws” that benefit us and dislike the ones that don’t.
Mr. Cross, if you as a hypothetical patient decides that a particular medication is the right thing for you and then you, unfortunately, are harmed by the medication (your hair falls out never to return or you develop large unsightly growths on your face) what recourse to you propose that you have? Not purchasing the medication again, making a negative post on Angie’s List to warn others….
My point here is, the idea behind licensure or accreditation is that in theory a body or group is telling you that an individual has met some minimum training or standards. Is there a way to eliminate that as a “requirement,” sure. However, if that is the case, then someone who would choose to go to a non-licensed physician would be giving up a certain expectation of minimum competence.
In your opinion, would the “free market” healthcare that you desire also eliminate the possibility of “malpractice” suits? After all, if there is no minimum standard of care, how can a physician be held liable?

I’m not sure it is the medical schools or regulators who are keeping the number of physicians low. It doesn’t seem as many people are willing to endure the years of training and study needed to competently practice when faced with the mounting regulations and less pay.

I don’t believe “prescriptions” are required in some other countries. However, I am not sure what that does to the relative cost or availability. Once a diagnosis is established with relative certainty the choice of medication based upon cost or convenience or what other criteria a patient chooses should be there. I am not an advocate of controlling another’s life. However, there are some out there who might self-diagnose based on a Reader’s Digest Complete Home Medical Book and in your scenario proceed to the local pharmacy to get the medication from the shelf, then…proceed to treat themselves for inflammatory bowel only to have colon cancer or lactose intolerance or worms for that matter.

Duncan Cross

Ms. Burgess — Thanks for your feedback. The Friedman link explains what physician licensure does and doesn’t do (you can skip down to the part that’s specifically about physicians), and how licensure and med school accrediation keeps the number of physicians artificially low. I’m not saying there are no good reasons for various rules and regulations regarding healthcare: my point is that if we want to talk about making healthcare a ‘free market’, then we have to justify those rules in market terms — or get rid of them.

Suzi Q 38

Kimberly,
Regarding your post:

“….Mr. Cross, if you as a hypothetical patient decides that a particular medication is the right thing for you and then you, unfortunately, are harmed by the medication (your hair falls out never to return or you develop large unsightly growths on your face) what recourse to you propose that you have? Not purchasing the medication again, making a negative post on Angie’s List to warn others….
My point here is, the idea behind licensure or accreditation is that in theory a body or group is telling you that an individual has met some minimum training or standards. Is there a way to eliminate that as a “requirement,” sure. However, if that is the case, then someone who would choose to go to a non-licensed physician would be giving up a certain expectation of minimum competence.
In your opinion, would the “free market” healthcare that you desire also eliminate the possibility of “malpractice” suits? After all, if there is no minimum standard of care, how can a physician be held liable?….”

With tort law and malpractice caps in the state I live in, California, it is not worth it for most patients to sue.
Add to that the horrendous cost of litigation with the retention of expert witnesses that are necessary to prevail in any case
where the patient is truly injured or mortally wounded.

The state medical board is a “joke.”
Don’t bother with patient advocacy, because the advocate works for the hospital. The CFO is there just to cover up for the errant physicians who are responsible.

Our best bet is yelp or calling the L.A. Times.

I heard another consideration is that we can notify the physician’s malpractice insurance carrier. Other than that,
we are told that we are crazy for thinking that the physician made an error.

taxthechurches

And how does the market deal with flat out market failure? In his seminal paper on insurance*, Nobel Laureate Kenneth Arrow discussed how unfettered markets will not provide optimal results in health insurance markets due to factors like moral hazard, adverse selection, knowledge and information asymetries, etc. Very few people have the financial resources to pay for, say, expensive cancer treatment (and some treatments are inherently very expensive so that that will be the case even if market reforms reduce prices), so they will need insurance to cover their risk of needing such treatment. Of course, no insurer will knowingly issue insurance to an applicant with expensive to treat cancer (or at least won’t at a price the applicant can afford). The insurer, however, has less information about the applicant’s health status than does the applicant, so the insurer cannot assess the applicant’s risk as well as the applicant. The insurer thus has to assume that the applicant wants insurance because he needs expensive treatment, and the insurer charges accordingly. Premiums go up. (This is the similar to why cars lose so much value when they leave the showroom; it is reasonably for a prospective purchaser to assume that anyone selling a newish car must think the car is a lemon, and since the seller has more info about the car than does the prospective purchaser, the purchaser will insist on paying less). Market failure; plainly ill people can’t get insurance and everyone else’s premiums go up because the insurers are (reasonably) worried they’ll be played for saps by people who need expensive care. There are other examples.

Welcome! You missed the earlier posts about free markets, in which insurance and Obamacare were decided to be various degrees of tyranny, so we’re going to get rid of them. I am just batting clean-up for that business, tying up the loose ends.